PARIS — LVMH Moët Hennessy Louis Vuitton now has a Big Bang.The French luxury giant on Thursday said it had purchased 100 percent of fast-growing Swiss watchmaker Hublot — known for its expensive Big Bang wristwatches — for an undisclosed sum."It's a strategic acquisition that is very complementary," said Philippe Pascal, president of LVMH's watch and jewelry division, which includes the Zenith, Tag Heuer, Chaumet and Fred brands."We didn't talk to anyone else," said Jean-Claude Biver, chief executive of Hublot. "LVMH was the only partner for us."Jean-Jacques Guiony, LVMH's chief financial officer, said the multiple paid of Hublot was more than two times 2008 sales and roughly 12 times 2008 earnings before interest and taxes. Hublot last year had sales of $150 million. Biver told WWD that sales this year would reach $250 million. Michel Dyens & Co. advised LVMH in the transaction.The acquisition comes at a time of extraordinary growth for the high-end Swiss watch market, spurred by demand in emerging markets from China to Russia. Exports of Swiss watches grew 16 percent last year, the highest rate in 18 years.In fact, many Swiss watchmakers have been struggling to meet worldwide demand and have bolstered production in efforts to slake thirst for the most expensive models.Hublot, founded in 1980 by Carlo Crocco, has been one of the sector's most buoyant names, with revenues growing by high double digits. The company got an additional boost in 2004 when Biver, a former Swatch Group executive and one of the most colorful people in the industry, came on board. Biver, who had already revived the Blancpain brand and is known in the industry as one of the pioneers who predicted the return of mechanical watches at a time when quartz pieces seemed to be the wave of the future, energized Hublot by building on the brand's heritage for mixing technical materials with traditional horology. Most successfully, he concentrated energy on the Big Bang watch that melded ceramic, carbon and rubber. Myriad variations followed.Sales leaped from 29 million Swiss francs in 2004 when he joined Hublot to 151 million Swiss francs last year.Biver, an avid wine collector, is known for his direct marketing approach and boundless enthusiasm. At Thursday's press conference, his face reddened with excitement as he recounted the brand's history.This year, the company introduced a Big Bang watch for women, which was praised by retailers. "Women's watches are the future," said Biver. Since the watch depends on a quartz movement that takes less time to produce and procure, it provides Hublot an opportunity to increase revenues without taking away production capability needed to satisfy its core men's market for mechanical pieces."Hublot is clearly a rising star in the industry," said Pascal."I'm staying on board," said Biver. "LVMH is going to help us build the company more."Biver said he expected Hublot to double its revenues in five years. One of the key areas of growth will be Asia and Japan, where Hublot is just building market share.Europe last year represented 47 percent of Hublot's sales, with the United States and the Middle East each accounting for 14 percent. Asia and Japan each accounted for 7 percent, with South America making up the rest. LVMH watch brands have a higher degree of penetration in the fast-growing emerging markets in Asia, a positioning from which Hublot expects to profit."There is enormous potential to expand in emerging markets," said Biver, who noted that Hublot will soon open shops in Kuala Lumpur, Malaysia, and Moscow. He said Hublot, which currently runs eight boutiques, is also in talks for a shop in New York.Pascal said the Hublot was a neat fit in LVMH's Swiss watchmakers portfolio, between the precision movements of Zenith and the sportier Tag Heuer brand. "It's important for us to have a portfolio with complementary brands," said Pascal.Hublot watches start at around 8,000 euros, or about $12,800 at current exchange, and go up to $1 million for a diamond-encrusted Big Bang."We try systematically to deliver 60 percent of the demand to make sure the product stays rare," said Biver. "That's what true luxury is."While Hublot outsources many of its movements from Swiss component makers, the brand remains highly innovative, often developing technological novelties like its movement in magnesium."Materials are a real innovation," Biver told WWD in a recent interview. "You need an innovative attitude. You need to be obsessed with trying never to repeat what's been done already. It's not so difficult once you have this attitude, but I must admit very few people have such an attitude in our industry."Biver said he was pleased Hublot was joining the world's largest luxury group, with total turnover greater than the entire Swiss watch industry. LVMH's revenues last year were 24 billion euros, or $37.63 billion at current exchange, while the Swiss watch industry sold about $16 billion last year.Though the deal suggested that LVMH may be ready to blaze back onto the acquisition trail, Antonio Belloni, LVMH group managing director, said the firm's first priority was organic growth of its brands, which range from Givenchy to Celine.
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